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Trump\u2019s $2K rebate plan from tariffs could cost double the revenue<\/p>\n
President Donald Trump\u2019s $2,000 tariff rebate plan could cost $600B yearly, double the revenue tariffs generate.<\/p>\n
Picture the letter K.<\/p>\n
On the right side, you can see the upper diagonal heading up, while the one on the bottom falls to the ground. Now substitute upper-income Americans for the topmost diagonal, heading up and away, and lower-income folks for the one on the bottom and you can understand why comparing our economy to the shape of a \u201cK\u201d resonates for many people.<\/p>\n
Beyond helping explain why many Americans feel they\u2019re falling behind, the K-shape phenomenon is a reminder that economic policies have real-life impacts, said Diane Swonk, chief economist for KPMG US, and a warning that the divergence between fortunes for more affluent people and the rest of the country isn\u2019t healthy.<\/p>\n
The ‘Gini coefficient’ is a technical analysis<\/a> of the gap between the rich and the poor.<\/p>\n \u201cInequality as measured by the ‘Gini coefficient’ is at its second-highest level on record,\u201d Swonk said. \u201cIt is at a level that’s more corrosive than conducive to growth.\u201d<\/p>\n But even more concerning, real-life examples of the growing divide between the wealthy and lower-income Americans are everywhere.<\/p>\n \u201cCustomers are feeling pretty stressed about the economy,\u201d said Ron Sargent, CEO of the grocery company Kroger on a September earnings call<\/a>. \u201cLow- and middle- income households are really looking for deals. They’re using coupons more. They’re making smaller but more frequent trips. And they’re buying more private label products. They’re also eating out less. When you look at the higher income households, while they’re also concerned about the economy and food prices, they’re still spending.\u201d<\/p>\n On Oct. 29, Chipotle CEO Scott Boatwright told stock analysts that consumers across all income levels slashed their spending earlier in the year when consumer sentiment declined. \u201cSince then, the gap has widened, with low to middle-income guests further reducing frequency,\u201d he said.<\/p>\n While it may seem fairly straightforward that people with more disposable income will go out and spend more, that\u2019s not traditionally how the U.S. economy has worked. In fact, wealthier Americans have traditionally been more likely to save money rather than spend it, Swonk noted, whereas lower-income consumers are more inclined to spend a greater percentage of their paycheck, or unexpected bumps like a stimulus check or tax refund.<\/p>\n